What is NCB Benefit in Car Insurance and How Does it Work?

What is No Claim Bonus (NCB) in Car Insurance - Full Details

Car owners need to mandatorily buy an insurance cover to comply the law. The Motor Vehicles Act of 1988 lays down this requirement that stipulates a third-party car insurance as minimum. Since the third-party cover provides coverage for only legal liabilities due to a third person, be it injuries or damages to their property, it is often not preferred by many. A comprehensive plan compensates for the limited coverage a third-party policy offers by providing coverage for damages to your car. But there are other benefits to buying a comprehensive plan. One such benefit is the no-claim bonus (NCB). This article elaborates on the benefits of NCB in 4 wheeler insurance and how does it work. 

But first, let’s look at what is no-claim bonus in car insurance. 

What is no-claim bonus?

No-claim bonus or as it popularly referred as NCB is the benefit that insurance companies provide to the policyholder when a claim isn’t made during the policy tenure. If no claims are made during a particular year, there is no risk which the insurer must provide for and hence, the insurer passes on such benefit to you, the policyholder. This way you can get a concession at time of your car insurance renewal online or offline. 

How does the NCB in your car insurance work?

Unlike other things where the prices keep on increasing steadily, the NCB feature in a comprehensive car insurance plan offers the opportunity to lower your premium. This way you can save on a significant portion of the premium.

No-claim bonus is a reward for your safe driving which results in no claims during the policy tenure. When a claim is not raised for any repairs, the insurer offers such NCB benefit helping you keep your premiums in check. The amount of such bonus is defined in percentages and starts at 20% and goes all the way up to 50%. However, to earn such a substantial portion of benefit, you need to avoid raising claims for consecutive policy years. If any claim is made during these tenures, the NCB gets reset and you are required to pay the full amount of premium. 

Also, you must note that the NCB benefit is not applicable on your entire comprehensive policy’s premium, but only for the own-damage component. Thus, you will be required to pay for the full amount of third-party coverage which is minor component whereas enjoy the benefits in own-damage cover. You can visit the official website of IRDAI for further details.

Does it benefit to avoid making claims for minor repairs?

A lesser-known trick to maximise the policy benefit using no-claim bonus is to avoid making claims for minor repairs to your car. When you raise a claim, you need to bear the cost of deductibles in your policy based on your policy terms. While the compulsory deductible is mandatory, voluntary deductible is another out-of-pocket expense that may be required if your policy terms stipulate. In addition to that, you end up losing the no-claim benefits at the time of renewal. So, weighing the cost of repairs vis-à-vis the NCB benefit and deductibles together, you can determine if a claim shall benefit your or not. * Standard T&C Apply 

To know the impact of such NCB on the premium, you can make use of a car insurance premium calculator too. Please note that insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.